International accounting framework demanded
Many insurers are calling for a single global accounting framework regime, Deloitte reported, as Solvency II brings about increased cross-border collaboration.
Almost half of insurers want a convergence of the two main accounting regimes used for multinational insurers. And 47% of respondents said the US should abandon its national accounting standards in favour of International Financial Reporting Standards (IFRS).
Respondents believe a single global regulatory and reporting regime would cuts costs and drive a more dynamic and competitive global market.
Much of the world is moving towards a risk-based solvency regimes. Charles Juniper, senior analyst, insurance financial service technology, Ovum, said: “I think we may end up with three regional blocks: Europe under Solvency II, North America with the Solvency Modernisation Initiative (SMI), and the Asia-Pacific has similar initiatives underway.
“That would be an improved situation, which could happen in the next five to ten years. A global regime is a great aspiration but I think that would be very difficult to achieve.
“It’s an interesting case of the industry wanting to drive regulation and the policymakers and regulators are the bottleneck, which isn’t the normal situation,” said Juniper.
Solvency II has brought insurers the ability to have an accurate, detailed and real-time view of risk, liabilities and investments as a tool to utilise their underwriting capacity more efficiently.
The directive also requires collaboration between people who would never previously work together as risk has become central to financial reporting.
IT departments have also had to bring fragmented IT landscapes together within multinational corporates, so companies are seeing the benefit of more collaboration and wider regulatory frameworks, say Juniper.